Fund of Information

Mutual Funds Use ETFs as a Shortcut

ETFs have become increasingly popular with all sorts of investors—including mutual fund managers. More than 100 mutual funds have 80% of their assets in ETFs, which are cheaper and more efficient to trade. So why are the mutual funds that invest in them more expensive?

File under: If you can't beat 'em, join 'em. The popularity of the $1.5 trillion exchange-traded-fund industry is indisputable. But what's surprising is how popular ETFs have become with mutual-fund managers.

In fact, the past five years have seen the launch of about 100 funds that hold at least 80% of their assets...